Tuesday, December 27, 2011

Rupee advances marginally

The rupee advanced marginally on Monday on
the back of a broad-based rally in the domestic stocks, but trading was quiet
due to Christmas holidays in the key overseas markets across the world.The rupee closed the day at 52.71 per US
dollar after touching a day's low of 52.9350. In local shares market, the BSE
Sensex ended up 1.5% and the NSE Nifty closed up 65 points or 1.4% over the
previous close.

The immediate trend remained subdued as
traders are staying on the sidelines ahead of the yearend. The recent actions
taken by the Reserve Bank of India to curb speculation has also kept appetite
subdued. The depreciation momentum of the Indian rupee is likely to sustain due
to negative factors like rising current account deficit, weak capital account
and fear of rising fiscal deficit.

In the global market, the EURUSD and GBPUSD
remained stable with the closure of major global markets on Monday. However,
the euro outlook is weak before Italy sells bills and bonds this week amid
concern Europe’s debt crisis will drive up borrowing costs for the region’s
larger economies.Italy is scheduled
to sell 9 billion euros ($11.8 billion) of 179-day bills and as much as 2.5
billion euros of zero-coupon 2013 bonds tomorrow. The nation will auction debt
due in 2014, 2018, 2021 and 2022 the following day. Ten-year bond yields in
Italy advanced six basis points to 6.98 percent on Dec. 23, approaching the 7
percent level that spurred Greece, Ireland and Portugal to seek bailouts.

The US dollar and Japanese yen is set to
advance versus most of its major peers this month as concern the crisis in
Europe will damp global growth boosted demand for the currency as a refuge. The
yen has gained against all 16 most-traded peers this year, strengthening 4.1 %
against the US dollar and 6.6% versus the euro. The US dollar has now started
gaining v/s the euro, GBP, CHF and major emerging Asian currencies.

Today, emerging currencies may come under
mild pressure as Asian stocks slide.The
MSCI Asia Pacific Index fell 0.2 percent to 113.61, at the time of writing.
Asian stocks were under pressure as the Bank of Japan warned of downside risks
to the economy and South Korean consumer confidence slid.